BMW’s Chief Financial Officer, Walter Mertl, revealed in a recent media roundtable that the company has reached a significant turning point in its sales dynamics. Mertl stated that BMW now experiences the majority of its sales growth from electric vehicles (EVs), marking a tipping point for traditional combustion engine vehicle sales. According to Mertl, this transition occurred last year, indicating a fundamental shift in the automotive market.

Mertl attributed the changing landscape to the plateauing of sales for combustion engine cars, predicting a further decline in the near future. He pointed to impending environmental regulations as a key factor that will likely restrict the sales of traditional vehicles. Automotive manufacturers, including BMW, are feeling the pressure to accelerate the development and production of electric offerings due to regulatory deadlines in regions such as China, the European Union, and certain U.S. states that plan to ban new fossil fuel-emitting cars.

In 2021, BMW achieved a noteworthy milestone with a 15% share of all-electric vehicle sales. The company aims to increase this share to 33% by 2026, unveiling plans for six new models in its exclusive “Neue Klasse” electric vehicle lineup. This initiative represents a substantial financial investment, reflecting BMW’s commitment to bridging the technology gap with competitors in the electric vehicle market.

However, Mertl acknowledged that the financial parity between combustion engine and all-electric cars within BMW’s portfolio might not be realized until at least 2026. He highlighted the higher costs associated with introducing new battery technologies for later electric models. Additionally, Mertl hinted at potential discounts for cars in specific price ranges, although he did not provide detailed information.

Despite the transitional challenges, BMW remains steadfast in its business objectives. The company aims to sell 3 million vehicles by 2030, maintaining an 8-10% margin in its automotive segment. This goal aligns with BMW’s conservative approach, falling below the expected 2023 margin of approximately 10.3%, as stated by Mertl. CEO Oliver Zipse emphasized in September that BMW expects to be “at least as profitable” when selling the “Neue Klasse” electric vehicles at scale. This optimism is grounded in the anticipation of lower battery costs and increased efficiency per kilowatt hour for electric models.

Source: Reuters